Bacon's Rebellion

Democracy Thrives in Sunlight

Getting Electricity from Government

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by

Dick Hall-Sizemore
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By Dick Hall-Sizemore

More than 300,000 Virginia residents and numerous commercial enterprises are not subject to the monopolistic electric rates of Dominion, APCO, or the electric cooperatives. They get their electric service from their local governments.

There are 16 municipalities in which electric service is provided by a governmental entity. Primarily, they are small towns (some surprisingly so) and small cities. They include the towns of Bedford, Blackstone, Culpeper, Elkton, Front Royal, Richlands, and Wakefield and the cities of Bristol, Danville, Franklin, Harrisonburg, Manassas, Martinsville, Radford, and Salem. Most intriguing of all is the Virginia Tech Electric Service, established by the university to provide electric service to the campus and the residents and businesses of Blacksburg.

These municipalities purchase most of their electricity from private companies such as American Electric Power Company. Several, such as Martinsville and Bedford, also use hydroelectric power for a portion of their needs.

According to the websites of some of these electricity services, it seems that most of them were formed around the turn of the 20th century, when electric service was not widely available in rural areas. This was one of the services the towns and small cities could provide to their residents, due to their population density.

These electric service programs are not subject to regulation by the State Corporation Commission. If the residents are dissatisfied with the rates or service, they can contact their town or city council members.

My Soapbox

As it often happens when I am poking around in data, I ran across a reference to something I was not expecting. In this case, it was city-supplied electricity services. Always interested in the services provided by local governments, I followed up and found out a little more. Given the interest on this blog with Dominion and electric power regulation, I thought it would be interesting to some readers.

These municipal electric service programs seem to be doing well. If their customers were not satisfied, these towns and cities are small enough that their complaints would carry weight with the governing bodies. There is even an active association for these power programs, the Municipal Electric Association of Virginia.

Before everyone gets too excited, these municipal power programs may not deliver electricity at a significantly lower cost than Dominion. I calculated what my cost of electricity in May would have been under Martinsville’s published rates. My cost under Dominion was only about two dollars more. Of course, in a year or so, after all the RAC’s that Steve has told us about, the story may be different.

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Comments

22 responses to “Getting Electricity from Government”

  1. Moderate Avatar
    Moderate

    These public power providers who buy power will find their costs got up as Dominion and AEP’s rates increase. There are a lot of public power providers across the nation, fewer in Virginia.

  2. LarrytheG Avatar
    LarrytheG

    Could be an interesting discussion, I wonder if any of these actually generate their own power or do they all just buy it like most co-ops do?

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Some own dams with hydroelectric plants that produce electricity. However, I get the impression that this is just a small percentage of the electricity they distribute.

  3. James A. Bacon Avatar
    James A. Bacon

    It would indeed be an interesting exercise to see where these municipal power providers get their electricity. Do they purchase most of it on the wholesale electric market?

    Other questions to ask: How green is the electricity, as in, how much comes from renewable energy sources?

    And most important of all, how reliable is the energy supply? How well do municipal electric services protect themselves against cyber-sabotage and extreme weather events?

    One more question: What potential exists for municipal electric systems to create their own microgrids and incentivize citizens to install solar power?

    1. Don Crawford Avatar
      Don Crawford

      Harrisonburg Electric Commission buys power from Dominion. I think they have a 35 year contract, but not sure the info came from a reliable source. HEC does send about $5million a year to the City budget. So it’s a challenge getting industrial scale solar on all the schools, for example, because it cuts into the funds the City gets.

  4. Eric the half a troll Avatar
    Eric the half a troll

    Related issue is the number of rural electric cooperatives in VA and how much of the state they cover:

    http://www.virginiaplaces.org/energy/coop.html

  5. Paul Sweet Avatar
    Paul Sweet

    Bedford buys most of its electricity from AEP. Their hydroelectric plant can generate 5 MW of the system’s 53 MW peak demand, but that probably varies with water flow in the river. They also have a small photovoltaic array at the former town landfill, but I don’t think its output is significant.

    https://www.bedfordva.gov/150/Electric-Department

  6. Nancy Naive Avatar
    Nancy Naive

    Wait. Hydroelectric? Maybe we could dam the Shenandoah, fill the valley, generate cheap electricty a la TVA, AND solve the I-81 problem.

  7. Thomas Hadwin Avatar
    Thomas Hadwin

    These municipals were formed years ago. Some time ago Dominion had a law passed that did not allow the creation of any new municipal utilities in Virginia that would sell electricity “at retail.”

    Many of them contracted with hydro facilities and other local generators. The contract that Dominion has with members of the Virginia Municipal Electric Association allows the muni’s to replace the generation that was owned and operated by VMEA members before December 31, 2009. All additional generation must be purchased from Dominion.

    Virginia’s municipals now operate as retail affiliates of Dominion, AEP, and ODEC. Don’t expect any deals from them because they purchase their energy at wholesale from the big utilities. Dominion is passing along the cost of the units retired early to their customers, including the muni’s. This will add millions of dollars to their costs, which are often spread over just a few thousand customers. All of the billions in added costs in new RACs from Dominion’s aggressive building program will hit all of their customers, including those of the municipals and co-ops.

    Dominion’s decision to leave PJM’s capacity market and go it alone, will further increase everyone’s electricity costs in Virginia. For those of you who value freedom and open markets, the vise is tightening on us in Virginia. Electricity has become one of the staples of modern life. Its reliable supply and affordable access is a growing concern. Because Virginia allows the legal purchase of favorable legislation, our state regulator has been increasingly pushed to the sidelines. Our choices are diminished, our costs are rising and the control is in the hands of a few large organizations. If you want to preserve what was good from the past – it didn’t use to be this way. This is not the path to prosperity, whatever the state candidates will tell you this year.

    1. James A. Bacon Avatar
      James A. Bacon

      I’d like to know more about Dominion’s exit from the capacity markets. I thought about trying to write it, but it would require a lot of background research to understand what I was writing about! Perhaps you and Acbar could opine on what that decision portends.

      1. LarrytheG Avatar
        LarrytheG

        Another article worth writing is about so-called “black-start” plants.

        ” The Texas Grid Came Close to an Even Bigger Disaster During February Freeze
        Many ‘black start’ units, which are used to jolt failed electricity systems, weren’t working”

        https://www.wsj.com/articles/texas-electrical-grid-bigger-disaster-february-freeze-black-starts-11622124896?page=1

        ” What are Black Start Services? – PJM Learning Center”

        https://learn.pjm.com/three-priorities/buying-and-selling-energy/markets-faqs/what-are-black-start-services

      2. Acbar Avatar
        Acbar

        The topic of Dominion exiting the capacity markets is a very complex topic – the ending is not necessarily good news for Dominion customers.

        1. energyNOW_Fan Avatar
          energyNOW_Fan

          Yikes! I could reflect my entire adult life in NJ/VA has been fighting the state/utility monopoly. Just getting worse.

  8. Thomas Hadwin Avatar
    Thomas Hadwin

    Jim,

    You have asked many goods questions to which I would like to briefly respond.

    How Green is the Municipal Electricity?

    Many of the munis have long standing hydro contracts. Otherwise, they receive the mix of whatever Dominion or APCo is generating, which currently includes only a small percentage of renewable generation. Dominion has offered some of the munis a portion of one of their utility-scale solar facilities, at a premium price.

    The co-ops and munis under contract to Dominion cannot build their own renewable generation (except to replace a retired legacy unit). They could use some of their own funds to incentivize their municipal government to install renewables, but that would reduce future revenues and their current cash balance.

    Customer- or taxpayer-owned utilities are having to choose their own self-preservation over what is best for their customers (owners).

  9. Thomas Hadwin Avatar
    Thomas Hadwin

    Reliability

    As customers of a major utility (Dominion or APCo), the munis are considered in the big utility’s reliability and extreme weather planning. The muni or co-op is responsible for maintaining or repairing its own distribution grid though. The big utility must have enough capacity on its transmission system to reliably serve the muni (or co-op).

  10. Thomas Hadwin Avatar
    Thomas Hadwin

    Cyber Attacks

    This is an excellent question. I doubt that most munis or co-ops have the resources to maintain an effective Cyber-Shield. This makes them vulnerable and also anyone they are connected with (the big utilities).

    I have recommended that the big utilities extend their software and hardware protections into the small utilities that they serve, perhaps for an affordable fee. This would increase the protection for everyone. Maybe they are doing this already. I hope so. I think it would be a good idea. But my guess is that we are lagging in this area. The limited regulatory oversight that munis receive leads me to believe that it is not happening.

  11. Thomas Hadwin Avatar
    Thomas Hadwin

    Micro-grids

    Micro-grids have the most benefit if they include some self-generation to maintain at least a portion of normal operation when the larger grid goes down. The prohibition of munis owning their own generation by their current supply contracts makes this a slim possibility. It would makes sense that first responder facilities, essential government offices, local hospitals, and perhaps schools or churches for shelter during extreme heat or cold, would be good candidates for local micro-grids.

    To best serve their communities, munis should explore this. But the contracts with the big utilities do not allow them to do so. This is the consequence of the overreach of the big utilities. Profits take precedence over the well-being of their customers. There should be some middle ground.

    Functioning micro-grids also help restore power to the larger grid during extreme weather events.

    1. LarrytheG Avatar
      LarrytheG

      The problem with smaller providers is that they lack the financial resources to do much in terms of investment or responding to changes.

      Larger entities are stronger and more resiiant to more immediate threats.

      But WSJ did post an article the other day on what is referred to as “Black Start” sites. It turns out that if a power plant goes down, it can’t come back up on it’s own. It needs electricity to re-start – chicken-egg so there are other sites that are not reliant on the grid that can be used as “jump-starters” for sites that are totally down and offline – to get them back up. Google “black start” power. https://en.wikipedia.org/wiki/Black_start

      1. Thomas Hadwin Avatar
        Thomas Hadwin

        Black starts have been an issue in the industry for quite a while. Before a unit joins the grid, it must synchronize its generator with the current in the grid. Electricity must be available onsite (from emergency generators, batteries, etc.) or via the grid that will allow it to synchronize and run other equipment such as pumps.

        If electricity is only available from offsite, it must be able to make its way to the generator trying to “black start.” A power line must be intact between an offsite source of electricity, such as a hydro facility, or a source of electricity within a micro-grid.

        These offsite sources of power must have a grid connection in order to provide black start support. That is why nuclear units went offline and could not return in Texas until the transmission system was repaired.

        That is why having Dominion continue its insistence to run only centralized sources of generation reliant on transmission to attach to the grid (even renewable sources such as solar) makes the grid less resilient and reliable.

        Distributed Energy Resources that provide energy within the distribution system, perhaps from within micro-grids make the grid much more reliable and the energy less expensive.

        This would be an ideal arrangement for munis and co-ops, but the contracts with the big utilities do not allow it.

      2. Acbar Avatar
        Acbar

        Just to take issue with your premise that “smaller providers … lack the financial resources to do much in terms of investment or responding to changes”: there are plenty of generation-constructing independents out there who will take care of the financing and the construction if they can find a host to partner with who will take care of the local politics for siting, licensing etc. Consider how political a new solar generator in Spotsylvania is today. But Dominion will only partner a deal if they have a piece of the action, if not exclusive rights to buy the finished project. A small municipal utility isn’t limited to that; it could get some great publicity by helping a nearby green project and buying its output without spending a lot of capital on it. TomH and I agree, the current supply arrangement between VMEA and Dominion hurts everyone by deterring innovative power supply arrangements that might be more attractive to independent generator owners than what DOM offers.

        As for the resistance to cyber threats this has been on the bigger utilities’ and the ISOs’ minds for years. Simply put, the ISO and every transmission owner has to have immediate, on-line operational communication with every operating generator and every load substation and every local utility facility control center at all times on its part of the grid. Again simply put, the big players have well-designed cyber security, the smaller ones may not. And even “well designed” only gets you so much, as Colonial Pipeline illustrated. This is a case of “the chain is no stronger than its weakest link” and the concerns about weak links are real. That said, the issue has received a lot of quiet attention from the reliability standards-setter, NERC, and throughout the industry, and with enormous support from DOE, FERC, and NARUC — none of the above want responsibility pinned on them for letting the bad guys into the grid’s computer systems or the massive blackouts that could result. Maintaining sufficient, highly-distributed black-start capabilities is among the most important backup lines of defense.

        1. LarrytheG Avatar
          LarrytheG

          in terms of Cyber – just having a robust system backup capability will protect you but many organizations don’t take IT seriously until disaster happens.

          My understanding was that in Colonial’s case, it was their BILLING system that got whacked!

          On the smaller provider/financial resilience issue… sure if someone is just selling power when they have it available and there is a buyer but that’s different than being on the bubble to deliver power or else and then a piece of equipment goes belly up and you have no reserves to buy a replacement.

          The Spotsylvania farm did have a lot of opposition BUT , to prove my point, the company – S-Power had the financial resources to bring in all kinds of experts, legal, and other to prevail whereas some smaller outfits simply don’t have that kind of resources and NIMBY can stop them.

          Even a big company like Dominion can run into trouble depending on the scope and scale of the opposition – ACP.

  12. James Wyatt Whitehead Avatar
    James Wyatt Whitehead

    The VT Central Steam Plant still uses coal to generate 943 million BTUs of steam output to heat the campus. What will the greenie weenies on Barger Street say about that? Nothing. The Barger Street hippie commune next to the steam plant was demolished for posh NOVA like condos.
    https://www.facilities.vt.edu/content/facilities_vt_edu/en/energy-utilities/central-steam-plant/history/_jcr_content/content/adaptiveimage.transform/m-medium/image.jpg

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